Boeing To Raise 767 Rate Amid Firming Freighter Demand

Boeing signaled continuing optimism about the future of the 767 line with Wednesday’s announcement that it would increase production rates of the widebody model from 2.5 to three airplanes per month starting in 2020. The decision to build another six airplanes per year comes amid strengthening demand for cargo capacity, reflected in a healthy backlog of some sixty 767-300Fs and supported by expected first delivery of another thirty-eight 767-based KC-46 refueling tankers to the U.S. Air Force by the end of this year. The latest rate hike announcement marks the third move to increase production since early 2016, when the pace of deliveries rose from 1.5 to two per month largely on the strength of a 2015 order for 50 airplanes and reservation of options of another 50 from FedEx.

At the time, the order raised FedEx’s order backlog to 106 and breathed new life into a program whose future seemed to hinge on the KC-46, development of which Boeing struggled to complete. Further expected “headwinds” from the introduction of the Airbus A330neo haven't materialized, while United Airlines’s lament in January 2017 about the lack of a direct replacement for its elderly 767 passenger jets raised conjecture among analysts about the possibility of a follow-on order for as many as 50 of the venerable widebodies. That didn’t happen, but this past February UPS placed a firm order for four more 767Fs, increasing the order backlog to about 100.

“We saw some re-strengthening [of the freighter market] last year, and we’ve seen further strengthening year-to-date,” Boeing CEO Dennis Muilenburg during the company’s first quarter earnings call with securities analysts Wednesday. “We’re going to maintain a very balanced approach on our production rates, but the fundamental strengthening of the cargo market is encouraging and I would say our product lineup to support that demand is a really good lineup.”